Over the past few years, the convergence of software and payments has captured the imagination of the fintech and SaaS (Software as a Service) world. And rightly so—bundling payments with software platforms saves time, streamlines operations, and simplifies financial workflows for merchants of all sizes. It’s a win-win: merchants benefit from greater ease and efficiency, while platforms unlock valuable new revenue streams.

Yet, amid all the buzz around integrated payments, one piece of the puzzle remains significantly underexplored: hardware. Specifically, Point of Sale (POS) terminals—often treated as an after-thought rather than a strategic revenue stream—are quietly sitting on a €1bn+ opportunity. We tend to get caught up in the eCommerce world, but in Europe over 70% of card volume is still face to face and hardware is vital in a whole range of verticals from retail to transit, hospitality to construction. And for SaaS companies, it’s an open door that remains largely untouched.

Why hardware is the next SaaS goldmine

Let’s start with the numbers. There are roughly 23 million POS terminals across Europe. Around 70% of these are deployed by large enterprises, which usually purchase their terminals directly from manufacturers. But it’s the small and medium-sized business (SMB) segment that holds the untapped value.

According to recent SMB survey data conducted by PSE Consulting, 45% of European merchants—with peaks of over 60% in markets like the UK—are either already using or are highly likely to adopt payment services via a software platform. These smaller merchants typically lease their POS terminals for €20–22 per month, and this figure can fluctuate based on country and terminal type.

Even with conservative assumptions, that translates into an annual hardware revenue pool of €800m to €1bn. Over the standard 3–4-year contract term, that becomes a €2–3bn opportunity—or around €700–800 per merchant. And that doesn’t account for the circular potential of refurbished and redeployed terminals, which can further amplify returns.

PSE Consulting’s experience indicates that some Payment Service Providers (PSPs) already see 20–30% of their SMB revenue coming from terminals. So, the question is clear: if PSPs are capturing this margin, why aren’t SaaS platforms doing the same?

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High margins, low risk, real growth

From a business standpoint, POS hardware can be extremely attractive. According to internal data from PSE Consulting, a typical terminal costs around €250 to purchase, while monthly lease rates deliver gross margins of up to 65%. Even after accounting for financing, repairs, logistics, and support, this remains a highly profitable revenue stream—especially considering that merchants often have more than one terminal.

In the UK, for instance, the average is 1.6 terminals per merchant, further boosting revenue potential.

Beyond the numbers, there are strategic advantages too. Unlike payment processing contracts—heavily regulated under PSD2 and often cancellable by merchants with minimal notice—hardware contracts can lock in customers for up to five years. That provides a level of stability and predictability rarely seen in modern SaaS.

Many SaaS providers are already halfway there. If you’re shipping physical hardware such as scanners, printers, or cash drawers, adding a payments terminal is a relatively small additional step. And for platforms with concentrated regional customer bases, warehousing and logistics are logistically feasible and economically efficient.

Think bigger than the terminal

The real power comes when SaaS platforms go beyond traditional POS. Some of the most exciting growth areas involve vertically tailored hardware bundles. Square, for example, offers a self-ordering kiosk for quick service restaurants at £35 per month, while SumUp provides all-in-one POS bundles—including screens, scanners, and drawers—for around £49 per month.

SoftPOS—also known as Tap to Pay—is poised to further disrupt this space. Instead of relying on a traditional terminal, SoftPOS turns any NFC-enabled device into a payment terminal. Sainsbury’s, for instance, has launched a Zebra device with SoftPOS functionality, enabling consumers to tap their cards to their self-scan “gun” anywhere in the store, no check-out queue, no fuss.

This evolution means that in the near future, SaaS platforms will be best positioned to offer flexible, software-led hardware bundles that traditional PSPs simply can’t support at scale. The future of in-person payments is not just about taking card transactions—it’s about owning the entire in-store device estate.

Five steps to capture the opportunity

For SaaS platforms and their investors, the question now is how to act. Here are five steps to unlock this hidden billion-euro market:

• Segment your customer base. Understand what types of hardware different verticals require. The more tailored the solution, the greater the value you can create—and charge for.
• Explore terminal sourcing. Talk to PSPs, hardware manufacturers, and local finance providers to understand your procurement and financing options. Aim to support both purchase and rental models.
• Understand the regulatory landscape. Make sure you are clear on security (PCI DSS) obligations, leasing contract structures, and any local rules on bundled services.
• Create bundled pricing packages. Develop flexible, transparent packages that combine hardware and payments processing. Make it easy for merchants to buy, upgrade, and scale.
• Train your sales teams. Ensure they can clearly articulate the value of bundled solutions—not just in cost savings, but in reliability, support, and tailored hardware experiences.

Conclusion: Don’t let this one slip away

In a world increasingly obsessed with digital transformation, it’s easy to overlook the physical components that still matter. But for millions of merchants across Europe, hardware isn’t optional—it’s essential.

For SaaS firms, that means a great opportunity to future diversify payments revenues and aid SaaS revenue retention —all while riding the continued momentum of embedded payments.

Payment transactions may be going digital, but merchant needs are still very much physical. It’s time for SaaS companies to stop ignoring the terminal—and start building a truly full-stack solution.

Tom Hay is a Senior Manager at PSE Consulting